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CHAPTER-1 INTRODUCTION
FINANCE
Finance is the lifeblood of the business. In our present day economy, finance is defined as the provisions of the time when it is required. In fact, finance is so indispensable today that just as circulation of blood is essential in the human body for maintaining life, finance is very essential to smooth running of all the activities. Finance remains as a focus of all activities. Without adequate finance no enterprise can possible to accomplish its objectives. The success of enterprise depends upon the available and optimum utilization of finance. All business organization requires finance and finance is one of the most important resources of an organization.
DEFINITION:
The financing function includes day-to-day concern for the use and control of funds as well as long range planning which is involved with determining future requirements for fund and optimum uses to which it may be put. The financial policies of the firm or exemplified in its basic decision about methods of financing growth; dividend distribution policy, relation with lending institutions, economic evolution of alternative investments in plant and equipments and other activities which involve uses or sources of funds. - L.A. and C.E. Gubellini Business finance may be broadly defined as the activity concerned with planning, raising, controlling and administrating of funds used in the business. - H. Guthman and H. Douggal
FINANCIAL MANAGEMENT
Financial management is the effective and efficient utilization of financial resources. It means creating a balance among financial planning, procurement of funds, profit administration and sources of funds. The financial management is defined as follows:
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DEFINITION:
Financial management is an area of financial decision making harmonizing individual motives and enterprise goal. - Weston and Brigham Financial management is the application of the planning and control functions of the finance function. - Howard and Upton
OBJECTIVES OF FINANCE
The main objective of a business is to maximize the owner economic welfare. This objective can be achieve by 1. 2. Profit maximization Wealth maximization
Profit maximization:
Profit is the engine that drives the business enterprise. It is also a measure of efficiency of a business enterprise. This objective of financial management states that these actions that increase profits should be undertaken and those that decreases profit are to be avoided.
Wealth maximization:
Wealth is defined as net present value. Wealth maximization is the appropriate and operationally feasible objective of enterprises. Wealth maximization means maximizing the net present value of a course of action.
MEANING:
Bank is one of the financial institution which deals with the money and credit. It accepts the deposits from the general public and they lend the funds to the needed public only on demand.
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DEFINITION:
Prof. Kinley defines a bank as an establishment which makes to individuals such advances of money as may be required and safely made and to which individuals entrust money which is not required by them for use.
(a) Secured loans and (b) Unsecured loans. (a)Secured loans: Are those which are granted against the security of tangible assets, like
stock in trade and immovable property.
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(b) Unsecured loans: Are those loans which are not covered by the security of tangible
assets. Such loans are granted to firms/institutions against the personal security of the owner, manager or director.
There are various types of securities which may be offered against loans granted, but all of those are not acceptable to the banks. The types of securities generally accepted by the bank are the following: 1) 2) 3) 4) 5) 6) 7) Tangible assets such as plant and machinery, motor-van, etc. Documents of title to goods, like Railway Receipt (R/R), Bills of exchange, etc. Financial Securities (Shares and Debentures) Life-Insurance Policy Real estates (Land, building, etc). Fixed Deposit Receipt (FDR) Gold ornaments, Jewellery etc.
(I)
When you want to borrow money from a bank, you will have to fill up a loan application form available with the bank free of cost. The loan application form contains different columns to be filled in by the applicant. It includes all information required about the borrower, purpose of loan, nature of facility (cash-credit, overdraft etc) required, period of `repayment, nature of security offered, and the financial status of the borrower. A running business limit may be required to furnish additional information in respect of : assets and liabilities profit and loss for the last 2 to 3 years. The names and addresses of three persons (which may include borrowers, suppliers, customers and bankers) for reference purposes.
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(II)
(V)
immovable properties, shares, debentures, fixed deposit receipts, and other documents, like, Kisan Vikas Patra, National Savings Certificate, as per agreement. When the borrower completes all the formalities, he is allowed to get the amount of loan/advance/ over draft as sanctioned by the bank. In case of discounting of bills, the bank credits the amount of bill to the customers account before the realization of the bill and thus, makes available the fund. In case, the bill is dishonored on due date, the amount due on the bill together with interest and other charges are payable by the party whose bill is discounted.
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Research design:
Research design is a purposeful scheme of action proposed to be carried out in a sequence during the process of problem to be tackled. It is only a guideline for a researcher to enable him to keep track of his actions and to know whether he was moving in the right direction in order to achieve his goal.
Methodology:
Primary data:
The major portion of the data in the report is collected from the bank manager, bank employees, bank customers and from the branch website.
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Secondary data:
Books Articles Internet News papers Annual report
CHAPTER
SUMMARY Deals with introduction of the study Shows research methodology of the study Gives brief knowledge about the company Explains the theory with related to study Shows the analysis and interpretation of data using graphs
Research design of the study Company Profile Theoretical background of the study Data Analysis and Interpretation
Chapter-6
Bibliography
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Chapter Scheme:
Branch Network
The bank has a widespread network of 690 branches (as on 30.06.2010) and 21 extension counters spread all over India which includes 5 specialised SSI branches, 4 industrial finance branches, 3 corporate accounts branches, 4 specialised personal banking branches, 10 agricultural development branches, 3 treasury branches, 1 asset recovery branch and 8 service branches, offering wide range of services to the customers.
Human Resources
The bank has a dedicated workforce of 10028 employees consisting of 3128 supervisory staff, 6900 non-supervisory staff (as on 30.06.2010). The State Bank of Indias Chairman is also the Chairman of its associate State Bank of Mysore. There is a Chief General Manager as well as 6 General Managers who assist the Managing Director of the Bank. The skill and competence of the employees have been kept updated to meet the requirement of our customers keeping in view the changes in the environment.
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Financial Profile
The paid up capital of the Bank is 360 Millions as on 30.06.2010 out of which State Bank of India holds 92.33%. The net worth of the Bank as on 30.06.2010 is Rs. 2073.40 Crores and the bank has achieved a capital adequacy ratio of 12.42% as at the end of 31.03.2010. The Bank has an enviable track record of earning profits continuously and uninterrupted payment of dividend since its inception in 1913. The bank earned a net profit of Rs. 445.77 Crores for the year ended March 2010 and earnings per share is at Rs. 124/-
Business Profile
Following table will showcase the business profile of State Bank of Mysore as on March 2010 (Figures are in Rs. crores): Total Deposits Total Advances Export Credit Forex Merchant Turnover Forex Trading Turnover 125156.64 39488.95 30603.18 1158.13 30678.46
Forex Services
State Bank of Mysore offers the following forex services to the NRIs: NRI Deposits Money Transfer to India through Western Union Remittance facility through State Bank of India, New York Branch Remittance to India-Global Link Service (GLS)
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Organizational Setup
While the Chairman of State Bank of India is also the Chairman of the Bank, The Managing Director of assisted by a Chief General Manager and 6 General Managers.
General Manager (Operations) General Manager (Planning & Development) General Manager (Commercial & Institutional Banking) General Manager (Treasury) General Manager (Technology) General Manager (Vigilance & Inspection)
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Board of Directors
Shri O P Bhatt Chairman Under Section 25(1)(a) of State Bank of India (Subsidiary Banks) Act 1959
Shri Dilip Mavinkurve Managing Director Under Section 25(1)(aa) of the Act ibid
Smt. Ratna K Makhija Nominated by Reserve Bank of India Under Section 25(1)(b) of the Act ibid
Shri S A Thimmiah Nominated by Reserve Bank of India Under Section 25(1)(c) of the Act ibid
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Shri Gururaja Rao Nominated by Government of India Under Section 25(1)(cb) of the Act ibid
Shri B S Gopalakrishna Nominated by Reserve Bank of India Under Section 25(1) (c) of the Act ibid
Shri K Anand Nominated by State Bank of India Under Section 25(1)(c) of the Act ibid
Shri Milind S Katti Appointed by Government of India Under Section 25(1)(ca) of the Act ibid
Shri D D Maheshwari Nominated by Governement of India Under Section 25(1)(e) of the Act ibid
Smt. May Rose Steele Elected Under Section 25(1)(d) of the Act ibid
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1959
1961 1963
1996
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Corporate Structure
EXECUTIVE BOARD
CM, MD SECT.
MANAGING DIRECTOR
DGM, COMPLIANCE
CGM SECT.
General Manager[Tech] & Chief Risk Officer General Manager [V&I] & CVO
ZONE No. of Regions BANGALORE I - 4 BA NGALORE II - 4 CENTRAL - 3 MYSORE - 5 HUBLI - 4 DELHI REGIONAL OFFICE MUMBAI Reg. OFFICE BA NGALORE BRA NCH DGM [ HR ] DGM [ LAW ] CM (BOD) DGM [BPR] AGM, G SEVA
DGM [ F & A ] CM [SHARES & BONDS] DGM [FOREIGN DEPT.] AGM [ PREMISES ] AGM [ SECURITY ] DGM,Intgd. TREASURY, MUMBAI
DGM [ D&RB ] AGM [ PLANNING ] CM [ O P D ] AGM [ MARKETING ] CM [ PUBLIC REL. ] AGM [ HOCC ] CM [ C & I ] CM [Liaison]
DGM [IT SERVICES] AGM [ISS CELL] AGM [POLICY & PLG.CELL] DGM [INTGD.RISK MGMT] CM [S&P]
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TECHNOLOGY INCENTIVES
The Bank made significant investment in order to upgrade technology and the major developments are as under:
5. The mismatch between Assets and Liabilities could affect the net profit.
5. Political instability and significant changes in the Governments policy on liberalisation of the Indian economy could impact the Banks financial results and prospects.
I PERSONAL LOANS
1. Mortgage Loan 2. Housing Loan 3. Happy Home- Consumer Durable Loan Scheme 4. Gnanamitra Educational Loan 5. Personal Loans 6. Loan for purchase of residential site / plot 7. My Bank Arakshak 8. My Bank Adhyapak 9. My Bank Utsav 10. Comprehensive Car loan for new vehicles 11. Sanjeevini - New product scheme for high cost treatment 12. My Bank Samachar 13. Gagan Mitra 14. My Bank Udyogi Gnanamitra
II AGRICULTURAL LOANS
1. Kisan Gold Card Scheme 2. Kisan Credit Card Scheme 3. Gramin Bhandaran Yojana (GBY) 4. Scheme for Combined Harvesters 5. Kisan Chakra Scheme
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6. Agriclinics and Agri business centers. (ABC 10 dated 30.08.01) 7. Solar Photo Voltaic Pumpsets(SPV) for Irrigations 8. Scheme for purchase of land for agricultural purposes 9. Scheme for development of Vanilla 10. Establishment of Bio-Fertiliser Units (Model Scheme) 11. Produce Marketing Loan (PML) 12. Drip Irrigation 13. Sprinkler Irrigation 14. Farm Mechanisation- SBM Agri Farm Scheme 15. Swarna Mitra Scheme 16. My Krishigen 17. Scheme for cultivation of Gherkins 18. Scheme for financing LPG connection in rural areas 19. Scheme for financing to tenant farmers & Oral lessees 20. Rain water harvesting scheme for SC/ST farmers 21. Scheme for financing of Jatropha plantation 22. Scheme for financing to cultivation of patchouli 23. General Credit Card
11. Mybank Doctor - New product to assist Doctors & Medical professionals for setting up Clinic/Nursing Home 12. Flexi (SSI) Term Loan 13. SME Credit Plus 14. Green Auto 15. Swarojgar Credit Card scheme 16. Mybank Professional Plus 17. Artisans Credit card (ACC) 18. Stand-by-line of Credit (Term Loan) for SSI and C&I Borrowers 19. Reimbursement Facility under Term Loans: (SIB and C&I Segment borrowers) 20. "Sooryadeepa": Scheme for Financing Solar Home-lighting system 21. Rice Mill Plus 22. Contractor Plus 23. Channel financing to ACC Cement Dealers 24. State wise roadmap for increase of credit to minority over the next two years 25. Priority Sector Lending (PSL) target for Minority Communities as on September 2008 : State-wise report.
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Courses Eligible- Higher Studies Diploma / Graduate / Post-graduate courses in the faculties of Engineering, Technology, Architecture, Medicine, Dental Science, Agricultural Science, Veterinary Science and Computer Certificate courses of reputed institutes accredited to department of electronics or affiliated to university.
Limit Amount of loan ( (in Indian Rupees) Higher Education- In India Higher EducationAbroad 10000 20.00 lacs MIN(Rs.) 10000 MAX(Rs.) 10.00 lacs
Margin Upto Rs. 4.00 lacs Above Rs. 4.00 lacs For studies in India Nil 5%
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15%
Rate of interest
Fixed rate-
Floating rate- Upto 4.00 Lacs 11.25% 4.00 to 7.50 Lacs 12.75% Above 7.50 Lacs 11.75%
Second Educational Loan To enable the students for taking higher education, provided the student secures 60% marks in existing course. The second loan is to be availed only from the branch where the first educational loan has been sanctioned.
Repayment Technical / Professional Higher studies in India / Abroad Repayment of loan to commence immediately after disbursal, by the parent / guardian, out of his / her income. Installments may be nominal (to cover interest portion, atleast) during the period the student is undertaking the studies. The installments will be stepped up one year after the completion of the course or after the student gets a job, whichever is earlier, so that the loan gets repaid together with interest within a period of 60 to 84 months thereafter.
Insurance An insurance policy will be taken on the life of the student borrower for an amount equivalent to the loan amount and the policy should be convertible whole-life one for 25 / 30 years, convertible after 5 years into one with endowment benefits. The Bank will pay the insurance premia on the policy by debiting it to the loan account. On liquidation of the loan, the policy will be reassigned and delivered to the borrower.
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Security Amount Upto Rs. 4.00 lacs Above Rs. 4.00 lacs and upto Rs. 7.50 lacs Above Rs. 7.50 lacs and upto Rs. 10.00 lacs Collateral security by way of immovable property or equal to the loan amount in the form of Government securities / NSCs / Units of UTI. Guarantee of parents / guardians (in the case of minors, the parent / guardian will execute the documents on behalf of the minor and also in his capacity as co-borrower) / third party guarantee where sufficient collateral security is not available. Collateral in the form of a suitable 3rd party guarantee Security NIL
Repayment Completion of course + 1 year or 6 months after getting a job, whichever is earlier.The interest to be debited monthly on simple basis during the repayment holiday / moratorium period. Penal interest @2% will be charged for amount above Rs. 2 lacs for the overdue amount and overdue period. Interest concession of 1% per annum is available, provided the interest is repaid during moratorium period as and when the interest is applied.
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2. PERSONAL LOAN
Eligibility Individuals, employees of state / central government, Public Sector undertakings, reputed profit making Public limited companies, Multinational companies with a minimum service of two years and drawing a net salary of Rs. 6,000/- or above.
Purpose To meet personal expenses like marriage, family functions, medical expenses, travel etc.
Loan Amount Upto Rs. 1.50 lacs depending on repayment capacity of the individuals.
Security Third party guarantee of equal means. Securities like LIC policies, NSC, KVIP, Shares etc.
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Loan amount: 30times of Net Monthly Income for salaried persons. 2.5 times of Net Annual Income for others.
Margin: Amount Loans upto Rs.6.00 lacs Above Rs. 6.00 lacs 30% Margin 15%
Rate of interest Fixed rate: During 1st year 8.25% During 2nd & 3rd year 10.25% Floating rate: For 4th & 5th year 3.75% above Base rate, present effective rate being 11.50% For 6th & 7th year 4.00% above Base rate, present effective rate being 11.75%
Insurance: Comprehensive insurance for full value of the vehicle. FREE ACCIDENT INSURANCE COVER (DEATH RISK ONLY)
Repayment: Loan should be repaid within 7 years from the date of original purchase of the vehicle.
4. HOUSING LOAN
Under Personal Segment, You can avail a loan for
Construction or Purchase of a new house or flat Repairs / Renovation / Extension of existing house For purchase of plot for construction of house within two years For purchase of built houses not more than 15 years old Housing loan against II charge For Purchase of Furnishings / Consumer durables as part of the project cost.
Attractive features of State Bank of Mysores Housing Finance scheme Loans from State Bank of Mysore are cheaper than housing finance agencies / companies. Nominal processing charges. No administration charges. No commitment charges. Interest charged on reducing balances. Facility available at all branches in India.
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Exemption from wealth tax for one house under Wealth Tax Act.
Quantum of Loan amount Loan amount for all categories Net Annual Income Upto Rs. 60000/Above Rs. 60000 to less than Rs.1,20,000/Above Rs. 1,20,000/- to less than Rs.2,00,000/Above Rs. 2,00,000 to less than Rs.5,00,000/Above Rs. 5,00,000 to less than Rs.10,00,000/Above Rs. 5 lacs EMI / NMI Ratio 20% 25% 30% 50% 55% 55%
Maximum Repayment period Age For persons below 35 years of age For persons below 45 years of age For persons above 45 years of age Repayment period 25 years 20 years 15 years
Margin Amount Upto Rs. 30 lakhs Above Rs. 30 laks to 75 lakhs Above Rs 75 lakhs to 1.00 Crore Above Rs 1.00 crore Margin (%) 20% 20% 25% 40%
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Rate of Interest NAME OF THE SCHEME PERIOD Rate Of Interest (Base Rate 7.75%p.a) Upto 5 years 9.25%
Above 5 to 15 years
9.50%
Above 15 to inclusive of 25 years HOUSING LOANS (Above Rs.20 lacs upto 30 Lacs) Upto 5 years
9.75%
9.25%
Above 5 to 15 years
9.50%
Above 15 to inclusive of 25 years HOUSING LOANS (Above Rs.30 Lacs) Upto 5 years
9.75%
9.75%
Above 5 to 15 years
10.00%
10.25%
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Processing charges Loan Amount Processing fee (Including Service tax) Rs. Up to Rs.5 lakhs Above Rs.5 lakhs & upto Rs.10 lakhs Above Rs. 10 lakhs & upto Rs.20 lakhs Above Rs.20 lakhs & upto Rs.50 lakhs Above Rs.50 lakhs & upto Rs. 1 Cr Above Rs. 1 Crore & upto Rs. 5 Cr Above Rs. 5 Crores 1000/2000/5000/7000/8000/10000/20000/-
Insurance The house property has to be insured covering all risks. Group insurance is available to cover the life of the borrower on payment of one time upfront premium.
Disbursement Direct to the sellers in case of purchase. For Construction / Repairs / Renovations in a phased manner.
Repayment Repayable in monthly installments. Repayment period ranging from 5 to 25 years, including a moratorium period ranging from 6 to18 months from the date of the first disbursement.
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5. MYBANK ADHYAPAK
Eligibility Permanent Teachers / Non-Teaching Staff of Central / State Govt. Educational Institutions and also Teachers and Non-Teaching Staff of Govt. Recognised Schools / Colleges / Aided Institutions.
Purpose Personal Loan for any purpose including purchase of consumer durables.
Loan amount 10 times net monthly income with a maximum of Rs. 1.00 lac.
Income of Spouse Spouse income may be added to arrive at the eligible loan amount provided spouse is also employed and stands as guarantor.
Margin Nil.
Rate of interest
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13.75%.
Security Upto Rs. 25000/- Nil (only check off facility) Above Rs. 25000/- check off facility. NSC, LIC policy may be insisted for security wherever possible or third party guarantee of equal means.
II AGRICULTURAL LOANS
1. Drip Irrigation
It is a method of irrigation in which the required quantity of water is supplied at low pressure to the root Zone of each plant drop by drop by drippers / emitters through a network of pipes so that the plants would not experience any stress through growing phase.
Why Drip Irrigation? Drip irrigation is a boon to the farmers in arid and semi arid areas where water is scarce. Main advantages of drip are
water saving 50-70% saving of labour and energy 60-90% use of low quality water Increase in yield 15-50% saving of nutrients 30-60% use in hilly terrain / problem soils
Crops
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The system can be used for all plants. However it is ideal for wide spaced high value Horticultural crops viz. coconut, plantation crops, fruit crops, medicinal plants, spices, flower plants etc.
Components of drip system Water supply pump, filters, fertilizer mixing tank, control system, main and sub main lines, laterals, micro-tubes and drippers.
Subsidy Capital subsidy on Drip irrigation equipments enhanced to 50% for all farmers and 100 % for SC/STs and Horticulture crops in Bijapur Districts. Rate of interest 13.75% (1.00% above SBMPLR)
Repayment 10-15 years with a grace period of 11 months in case of yielding plantations In case of new plantations grace period up to the period of maturity / yielding For crops like sugarcane 7 years coinciding with harvesting / marketing.
Purpose Purchase of agrl. land as well as fallow and waste land to SF / MF / landless agri labourers.
Eligibility
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SF and MF and landless agri labourers. Total land holding should not exceed the prescribed ceiling of land holdings including the purchased one as advised by NABARD.
Quantum of loan Should not exceed Rs.2 lacs by way of ATL and investment on land development and provision of irrigation should not exceed 50% of the cost of land.
Repayment 7-10 years in half yearly / yearly instalments including a moratorium of 24 months.
Purpose To meet the timely Cash Credit and Consumption credit requirements of the farmers.
Quantum of loan o Entire crop production requirements for full year is fixed based on operational land holding, cropping pattern and scale of finance.
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o o
Ancilliary to crop production viz. maintenance of Agri-machiney implements, electricity charges also may be considered. Contingency requirement to an extent of 20% of the peak credit limit for expenses like Medical, Education, Marriage, Funerals, Birth and other religious ceremonies.
Drawing power Appropriate drawing may be fixed based on seasonality in credit requirements, projected cash flow / repayment , peak level requirement
Repayment KCC is like revolving cash credit limit valid for 3 years subject to annual review. Repayment to coincide with harvesting / marketing. Any number of withdrawals and repayment within the limit allowed.
Credit card A credit card cum pass book issued to the farmer borrower.
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Mechanisation of farming has been considered as one of the important inputs in farming, to complete the farm operations on time and to increase production and reduce the drudgery of human labour. With the rapid advancement in agriculture, there has been an increased use of farm machanisation equipments like Tractors and Power Tillers which help us tiding over the labour problem for Agriculture. We have been assisting the farmers for purchase of Tractors / Power tillers etc. However, with a view to enhance our lending under Farm Mechanisation, our Bank has entered into an MOU with the following Tractor manufacturing Companies a) M/S Escorts b) M/S HMT Limited c) M/S TAFE d) M/S Swaraj e) M/S New Holland Tractor (Ford) f) M/S SAME Tractors g) M/S International Tractors Limited (Sonalika) h) M/S Eicher Tractors i) M/S L&T John Deere private Limited j) M/S Bajaj tempo Limited k) M/S Mahindra Gujarat Tractor l) M/S Mahindra and Mahindra Limited m)M/S Standard Combines (P) Ltd n) M/S Indo Farm Tractors o) M/S SAS Motors ltd., (Angad Tractors) p) M/S Preet Tractors (p) Ltd
POWER TILLER COMPANIES a) M/S Greaves Cotton Limited b) M/S Bengal Tools Limited
The borrower should possess a minimum of 4 acres of wet land or 6 acres of dry land to ensure viability of the medium term loan to be extended for the purpose. Tractor finance to farmers who are having lesser land holdings than stipulated can also be considered on a case to case basis provided the applicant is having sufficient income from other sources to service the debt. Economic use of Tractor The tractor should have a minimum of 1000 hrs production work in agri. per year either on own farm or on custom hire or both. Minimum 3 implements should be owned by the beneficiary (either with bank finance or purchased with own funds) The Tractor financed should have the necessary commercial test report as per BIS code issued by CFMTTI (Central Farm Machinery Training and Testing Institute), Budni, Madhya Pradesh.
Margin Money Down payment in respect of farm mechanization loan for new tractors will be not less than 10% of the investment cost in case of tractors and implements.
Registration of the tractor The tractor should be registered with the concerned Regional Transport Authority.
Insurance Comprehensive Insurance cover should be obtained in respect of the assets acquired. Premium for first year will be paid by the concerned Company dealers.
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Selection of Tractors Bank may consider financing of tractors on the basis of viability of individual proposals but the choice and selection of such tractors may be left to the choice of individual beneficiaries.
Security As per Banks norms. (a) Hypothecation of Tractors. (b) Equitable Mortgage of lands.
The salient features of the scheme are presented below: Purpose to provide easy loans to meet their immediate agricultural requirement. Loans against pledge of Gold Ornaments. Rate of interest as applicable to agricultural cash Credits. Repayment coinciding with the harvesting season. Advance amount Rs. 650/- per gram, subject to a maximum of Rs 5 lacs per borrower.
1. RETAIL TRADE- ADVANCES TO RETAIL TRADERS (OTHER THAN FERTILIZERS & MINERAL OILS)
Eligibility
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All types of Retail Traders are eligible. Persons who propose to start retail trade business, fair price shop, consumer co-operative stores are also eligible for finance.
Margin No margin upto Rs. 25000/- 15 to 20%, for credit limits exceeding Rs. 25000/-
Security Assets created out of Banks finance collateral security as per Banks norm.
Eligibility Any individual / partnership firm / Public or Private Ltd. Companies desirous of promoting MSEs (Manufacturing sector) with investment in Plant & Machinery not exceeding Rs. 5 crore and Medium Enterprises with investment in plant & Machinery is above Rs. 5 Crore and upto Rs. 10 crores.
Extent of Finance Need based (both fund based and non-fund based).
Margin Working capital/ medium term loan. a) No margin upto Rs. 25000/b) Credit limit over Rs. 25000/Dept. of Commerce & Management, .G.F.G.C. Dandinashivara Page 38
Collateral: Obtention of collateral Security exempted. Up to Rs. 5 lacs. Over Rs. 5 lacs and up to Rs. 25 lacs, based on good track record and satisfactory financial position. Over Rs.25 lacs at the discretion of the Bank.
Export Finance
Establishment of Letter of Credit. Pre-shipment finance. Post-shipment finance. Assistance against Duty draw back.
3. TRANSPORT OPERATORS
Eligibility
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Margins No margin upto Rs. 25000/15 to 25% for credit limit exceeding Rs. 25000/-
Security Assets created out of Banks finance. Collateral security as per Banks norm.
Women entrepreneurs comprise those small scale units managed by one or more women entrepreneurs who have stake not less than 51% of the equity.
The important features of the package are: The entrepreneurs who have undergone EDP conducted by State level Agencies or programmes co-sponsored/sponsored by Bank are eligible for financial assistance. Branch Manager and the field Staff will provide necessary inputs and assistance to those women who do not plan to set up ful-fledged industrial ventures but would like to do something at home.
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Concession in Margin : Retail Traders Category Limit Slab in Rs. Over Rs. 5000/- upto Rs. 25000/Over Rs. 25000/- upto Rs. 1.00 lac Business Enterprises Category Limit Slab in Rs. Upto Rs. 25000/Over Rs. 25000/- upto Rs. 1.00 lac Margin concession NIL 5% Margin concession NIL 5%
Professionals & Self-employed women Category Limit Slab in Rs. Upto Rs. 25000/Over Rs. 25000/SSI Category Limit Slab in Rs. Upto Rs. 25000/Above Rs. 25000/Margin concession NIL 5% Margin concession NIL 5%
Interest concessions
No interest concession in respect of SSI units enjoying credit limits over Rs.25000/- but
up to Rs.2 lacs.
Above Rs.2 lacs and up to Rs.50 lacs, interest rate lower by 0.50% than the applicable
rate.
For Small Business enterprises under the scheme, interest rate lower by 0.50% than the
applicable rate.
For advances to professionals and self employed persons interest rate lower by 0.50%
than the applicable rate.
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5. ANNAPURNA- SCHEME FOR FINANCING WOMEN FOR ESTABLISHING FOOD CATERING UNITS
Eligibility Women (both individual and Partnership firms).
Purpose For establishing food Catering Unit for selling tiffin/food/lunch packs etc.
Type of loan Composite Term Loan (Working Capital portion will be within 50% of CTL).
Purpose of loan Term Loan component can be used for purchase of utensils and cutlery, gas connection, Refrigerator, Mixer cum Grinder, Hot case, Utensil stand, Tiffin boxes, Working table, Water filter etc.
Margin : 10%.
o Holding stocks / Receivables. o Acquisition of land and buildings for establishing trading house. o Building construction & renovation of offices, showrooms, godowns etc. o Purchase of equipment, furniture & vehicles. o Augmenting networking capital. o Payment of long term deposits / advances to supplier. o General trade purposes.
Eligibility
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Applicants should be engaged in trade, services activities, and have rating of SBM 1 to 4 under Credit Risk Assessment System. Earned pre-tax profits in the immediately preceding 3 years. Sales tax registration & relevant business license.
Interest SBM Prime Lending Rate plus spread as per Credit Risk Assessment System.
Insurance Comprehensive insurance of all securities. Audited Financial Statements must for limits above Rs.25 lacs.
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Salient features of the scheme: A maximum amount of Rs.500.00 lacs is extended by way of cash credit/ term loan facility, with margin 35%.
Rate of interest Cash credit 13.00% i.e. 4.75% above base rate. Term loan 13.50% i.e. 5.25% above base rate. Limit is available for a period of 12 months renewable annually for cash credit and for term loan 60 months. The hypothecated stocks and other securities offered are to be insured comprehensively. Stock statements/ book debt statements to be furnished quarterly in case of loan for inventories or current assets. Immovable property of 153% of the loan amount to be mortgaged to the bank. No third party guarantee.
Salient features of the scheme:(revised scheme wef 10.04.07) A maximum amount of Rs.50 Lacs is extended by way of Cash Credit facility, with margin ranging between 25 % and 35%. 65% of realisable value of property mortgaged. Valuation report not more than three months old. Types of properties that can be mortgaged are restricted. For limits Rs.25 Lacs & above audited financial statements are to be submitted. Annual interest liability should not exceed 50% of gross profit. Limit is available for a period of 12 months, renewable annually. The hypothecated stocks and other securities offered are to be insured comprehensively. Stock statements / book-debts statements to be furnished annually as on 31st March every year. Personal guarantee of the promoters / partners / directors of the company. Immovable property to be mortgaged to the bank. Third party guarantee is also accepted.
A new scheme for Construction / Renovation / Repairing of School/College Buildings; Purchase of electronic equipments such as Computers, Laboratory Equipments, Library Books etc.
Salient features of the scheme: Nature of facility Demand Loan / Term Loan. Eligible Customers Educational Institutions with adequate source of income.
Purpose Construction / Renovation / repairing of school/College buildings; Purchase of Electronic equipments such as computers; Laboratory Equipments, Library books etc.
Rate of interest Amount Upto Rs. 2.00 lacs Above Rs. 2.00 lacs & upto Rs. 25.00 lacs a) Repayable in less than 3 years b) Repayable in 3 years & above Rate of Interest(%) 12.25%(1% below SBMPLR, i.e. 13.25-1.00 =12.25%)
Primary Security Equitable mortgage of the immovable property / hypothecation of assets acquired out of the Bank loan.
Collateral Security Personal guarantee of key persons / Trustees / Promoters. Equitable mortgage of immovable property.
Salient features of the scheme: Nature of facility Cash Credit, Term Loan, Letter of Credit, Bank Guarantee.
Purpose Construction / Modernization of hotels, restaurants, health clubs, amusement parks etc., Purchase of Luxury buses, Coaches, Cars etc., at tourist centres.
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Margin 20% of the project cost. 40% in case of second hand vehicles/equipments.
Rate of interest SBMPLR + spread as per Credit Risk Assessment System. Between 14.00% to 15.50%.
Collateral Security Tangible collateral in the form of immovable property / NSCs etc.
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Interpretation: The above table shows that, out of total respondents 40% of them lies under Others category, 32% of them lies under Graduates category, 20% of them are Under graduates and 8% of them are Post graduates.
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Conclusion: It can be easily inferred that the majority of respondents comes under Other educational group. Among all the respondents 40%(majority) of them falls under Others category and 8%(minority) of them falls under Post Graduate category.
Graph No. 1
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Table No. 2
No. of respondents 21 10 11 8 50
Interpretation: The above table clearly shows that out of 50 respondents 21 of them are salaried persons, 10 of them are retired persons, 11 of them are self-employed persons and 8 of them belongs to others category.
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Conclusion: It can be easily inferred that among 50 respondents 42% of the respondents are salaried persons, 22% of them comes under self-employed category, 20% of them are retired and 16% of them falls under others category.
Graph No.2
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Table No. 3
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Interested Yes No
No. of respondents 36 14 50
Interpretation: Out of 50 respondents 36 of them are interested in borrowing loans and only few that is 14 members are not interested in borrowing loans.
Conclusion: It is clear by seeing the graph that majority (72%) of the respondents like to borrow loans and minority(28%) of respondents have considerably less interest in borrowing loans due to various reasons.
Graph No. 3
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Table No. 4
Reasons Not necessary Lack of information about loans Unsure about repayment Local lenders
No. of respondents 4 2 3 5 14
Interpretation: Out of 14 respondents not interested in borrowing loans 4 of them comes under not necessary category, 2 of them under lack of information about loans category, 3 of them under unsure about repayment category and 5 under local lenders category.
Conclusion: Most of the respondents gave reasons for not borrowing loan is due to local lenders. So the Banks should consider this reason in order to increase the rate of interested respondents in future.
Graph No. 4
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Table No. 5
Dept. of Commerce & Management, .G.F.G.C. Dandinashivara Page 57
Preference Personal Agricultural Micro & Small Enterprises Commercial & institutional
Interpretation: Out of 50 respondents 14 respondents comes under personal loans, 17 respondents comes under agricultural loans, 12 respondents comes under micro & small enterprises loans and 7 respondents comes under commercial & institutional loans.
Conclusion: Most of the respondents prefer to obtain agricultural loans and only a few respondents like to borrow commercial & institutional loans. Thats why our India is called as an agriculture based country.
Graph No. 5
Dept. of Commerce & Management, .G.F.G.C. Dandinashivara Page 58
Table No. 6
Dept. of Commerce & Management, .G.F.G.C. Dandinashivara Page 59
Table showing the factors that influenced the respondents to borrow the loans.
No. of respondents 16 6 20 8 50
Interpretation: Out of 50 respondents 16 belongs to loan amount, 6 belongs to purpose, 20 belongs to interest rate and 8 belongs to repayment period.
Conclusion: Majority of the respondents are influenced by the interest rate factor, secondly by the factor of loan amount and least influenced by repayment factor.
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Graph No. 6
Graph showing the factors that influenced the respondents to borrow the loans.
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Table No. 7
Table showing repayment period preferences.
Repayment Period Less than 1 year 1-5 years 5-10 years Above 10 years
No. of respondents 5 15 20 10 50
Interpretation: Out of 50 respondents 5 respondents comes under less than one year, 15 respondents comes under one to five year, 20 respondents comes under five to ten years and 10 respondents comes under above ten years.
Conclusion: From the graph we can say the majority of the respondents would like to repay the loan from 5-10 years, because it is suitable for all levels of customers.
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Graph No. 7
Graph showing repayment period preferences.
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Table No. 8
Table showing respondents choice from among the following agricultural loans.
Sl. No. 1. 2.
Agricultural Loans Drip irrigation Scheme for purchase of land for Agr. Purpose Farm Mechanisation Swarna Mitra Scheme Kisan Credit Card Scheme
No. of respondents 17 9
Percentage (%) 34 18
3. 4. 5.
12 7 5
24 14 10
Total
50
100
Interpretation: In the above table out of 50 respondents 17 respondents comes under drip irrigation, 9 respondents comes under scheme for purchase of land for agricultural purpose, 12 respondents comes under farm mechanization, 7 respondents comes under Swarna mitra scheme and 5 respondents comes under Kisan credit card scheme.
Conclusion: Among the five popular agricultural loans majority of the respondents would prefer in borrowing drip irrigation loan, secondly for farm mechanization loans and minority in borrowing Kisan credit card loan.
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Graph No. 8
Graph showing respondents choice from among the following agricultural loans.
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Table No. 9
Table showing respondents preference in borrowing the below listed personal loans.
Personal Loans Car loan Gnanamitra education loan Housing loan Personal loan My Bank Adyapak
No. of respondents 9 12 10 14 5 50
Interpretation: In the above analysis out of 50 respondents 9 respondents comes under car loan, 12 respondents comes under gnanamitra loan, 10 respondents comes under housing loan, 14 respondents comes under personal loan and 5 respondents comes under my bank adyapak loan.
Conclusion: Most of the respondents would like to borrow personal loan from the other five popular personal loans and secondly they give more preference in borrowing gnanamitra education loan.
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Graph No. 9
Graph showing respondents preference in borrowing the below listed personal loans.
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Table No. 10
Table showing respondents choice in borrowing the following micro & small enterprises loans.
Micro & Small Enterprises Loans Annapurna Scheme Stree Shakthi package Loans to MSEs Transport Operators Loans to Retail Traders
No. of respondents 8 16 9 6 11 50
Interpretation: By seeing the above table out of 50 respondents 32% of the respondents prefer stree shakti loan, 22% of respondents in loans to retail traders, 18% of respondents in loans to MSEs, 16% of respondents in Annapurna loan and 12% of respondents in transport operators.
Conclusion: After having a look over the above graph we are able to say that most part of the respondents are interested in borrowing stree shakti loan.
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Graph No. 10
Graph showing respondents choice in borrowing the following micro & small enterprises loans.
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Table No. 11
Table showing which loan does the respondents like to obtain from the below listed commercial & institutional loans.
Sl. No.
Commercial & Institutional Loans SBM School Plus Scheme for traders Handy loans SBM Paryatan Plus
No. of respondents
Percentage (%)
1. 2. 3. 4. Total
10 13 20 7 50
20 26 40 14 100
Interpretation: Among 50 respondents 20 respondents comes under handy loan, 10 respondents comes under SBM school plus, 13 respondents comes under scheme for traders and 7 respondents comes under SBM paryatan plus.
Conclusion: 40% of the respondents are interested in handy loan scheme and other schemes have considerable interests. So majority of respondents like handy loan.
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Graph No. 11
Graph showing which loan does the respondents like to obtain from the below listed commercial & institutional loans.
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Table No. 12
No. of respondents 6 32 10 2 50
Interpretation: Out of 50 respondents 6 respondents are highly satisfied, 32 respondents are satisfied, 10 respondents are considerably satisfied and only 2 respondents are not satisfied with the loans and advances.
Conclusion: From the graph we can say majority of the respondents are satisfied with the loans and only a few respondents are not satisfied.
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Graph No. 12
Graph showing the level of satisfaction towards loans and advances.
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Table No. 13
Table showing the expectations of the borrowers from loans.
Expectations Low rate of interest More amount Long repayment period Subsidy
No. of respondents 24 16 5 5 50
Interpretation: Out of 50 respondents 48% of respondents comes under low rate of interest, 32% under more amount, 10% under long repayment period and 10% under subsidy.
Conclusion: From the analysis one can say that majority of the respondents expect low rate of interest and also more amount from the loans.
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Graph No. 13
Graph showing the expectations of the borrowers from loans.
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LEARNING EXPERIENCE:
During this training period, I really learnt many aspects. I have learnt about the loans and advances, their interest rates, types like term loan/demand loan, insurance coverage and security etc.
FINDINGS
1. During the study it is found that out of 100% respondents still 28% of them are not interested in borrowing loans.
2. From the study it is known that the level of highly satisfied respondents is less when compared to level of satisfied and considerably satisfied respondents. 3. Most of the respondents are expecting low rate of interest and also more loan amount from the loans. 4. Compared to other types of loans and advances customers in more number are borrowing agricultural loans in the Ammasandra branch and personal loans occupy the next position. 5. The study discloses that Stree Shakti package is more popular than any other micro & small enterprises loans. 6. Many of the respondents gave reasons for not borrowing loans is due to the influence of local money lenders. 7. It is found that most of the respondents preferred 5-10 years of repayment period. 8. From this study it has come to light that among all the agricultural loans drip irrigation loan is more popular.
Dept. of Commerce & Management, .G.F.G.C. Dandinashivara Page 76
9. Among the total population of Ammasandra majority of them are employed and thus there is more demand for personal loans in this branch. 10. It was clear from the study that large number of womans has been greatly empowered by Stree Shakti package. 11. Bank Manager plays a key role in making public knowledgeable about availability of different types of loans and advances for different purposes. 12. Most of the farmer respondents were expecting more subsidies on agricultural loans.
SUGGESTIONS
1. Still there are a number of aspects to be considered in order to make loans and advances more popular like rate of interest, insurance coverage, security, eligibility etc., 2. Bank has to take several steps to make loans more reliable with public interest. 3. Timely awareness programmes related to loans are needed in order to literate the public about the loans and advances. 4. Procedure to borrow loans and advances should be made more liberal. 5. Most of the respondents say that the duration between applying for loan and disbursement of loan amount needs to be minimized. 6. During the study most of the respondents said that the insurance coverage over the loans is needed to be extended still more. 7. The amount of subsidies on agricultural loans should be increased in order to encourage the farmers.
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CONCLUSION
From this study I would like to conclude that the bank is playing a very significant role in the development of Ammasandra and its surroundings. And I like to say another important aspect without forgetting that most of the youths, unemployed and other category people have got immense advantage from this bank by borrowing loans to start their own business and many of them are also successful in it. Directly or indirectly the bank has reduced the rate of unemployment in its limits.
This study made me to understand the various types of loans available and their features, so from this knowledge I am able to create awareness among the people around me. According to me the students can be benefitted by borrowing the educational loans for their higher studies which is helpful in bringing down the burden of the parents. Since it is a rural area majority of the loans borrowed in this bank is agricultural loan.
From the previous chapter data analysis and interpretation I conclude that most of the respondents were satisfied with the loans provided to them by the bank and they also have made full use of those loans.
Finally, I conclude that the bank and its employees are sincerely working towards the development and welfare of the society through their dedicated service which is commendable.
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QUESTIONNAIRE
Dear sir/madam I am pursuing .B.B.M Degree from Tumkur University and my project topic is A Study On Loans and Advances (with respect to State Bank of Mysore, Ammasandra). This Questionnaire is being administered for the purpose of collecting the individual perception on loans and advances and it will be used exclusively for academic interest. I request you to kindly spare some time and reply to this questionnaire. Personal information Name: Age: Gender M/F:
1. Education Qualification: Under Graduate Post Graduate Graduate Others (please specify)
5. What type of loans and advances you prefer? Personal loans Commercial loans Agricultural loans MSE loans
6. Why do you prefer the above option? Loan amount Interest rate Purpose Repayment period
7. How much period do you prefer for repayment? Less than a year 5 to 10 years 1 to 5 years Above 10 years
8. Among the following agricultural loans, which loan do you prefer? Drip irrigation Farm Mechanisation Kisan Credit Card Scheme Scheme for purchase of land for Agr.Purpose Swarna Mitra Scheme
9. Which loan do you like to borrow among the below listed personal loans? Car loan Housing loan My Bank Adyapak Gnanamitra education loan Personal loan
10. Among the following micro & small enterprises loans, which do you like to borrow? Annapurna Scheme Loans to MSEs Loans to Retail Traders Stree Shakthi package Transport Operators
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11. Which loan do you like to obtain from the below listed commercial & institutional loans? SBM School Plus Handy loans Scheme for traders SBM Paryatan Plus
12. How satisfied are you with loans and advances? Highly satisfied Not satisfied Satisfied Considerably satisfied
13. What are your expectations from loans? Low rate of interest Long repayment period More amount Subsidy
Any suggestions,
THANK YOU
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BIBLOGRAPHY
Books Referred
Financial Management Law and Practice of Banking Business Research Method Research Methodology C.R. Kothary Shashi K Gupta, R.K. Sharma, Neeti Gupta K. Venkataramana
Websites Used
www.statebankofmysore.com www.google.com www.wikipedia.com www.osun.org
News Papers
Business Times
Annual Report
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ANNEXURE
LIST OF TABLES
Table No. 1 2 3 4 5 6 7 8 9 10 11
Title
Table showing the respondents educational qualification. Table showing number of respondents on the basis of occupation. Table showing the rate of interested borrowers. Table showing the reasons for not borrowing the loans. Table showing the preferences of borrowers in borrowing loans and advances. Table showing the factors that influenced the respondents to borrow the loans. Table showing repayment period preferences. Table showing respondents choice from among the following agricultural loans. Table showing respondents preference in borrowing the below listed personal loans. Table showing respondents choice in borrowing the following micro & small enterprises loans. Table showing which loan does the respondents like to obtain from the below listed commercial & institutional loans. Table showing the level of satisfaction towards loans and advances.
Page No.
12
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13
LIST OF GRAPHS
Graph No.
1 2 3 4 5 6 7 8 9 10 11
Title
Graph showing the respondents educational qualification. Graph showing number of respondents on the basis of occupation. Graph showing the rate of interested borrowers. Graph showing the reasons for not borrowing the loans. Graph showing the preferences of borrowers in borrowing loans and advances. Graph showing the factors that influenced the respondents to borrow the loans. Graph showing repayment period preferences. Graph showing respondents choice from among the following agricultural loans. Graph showing respondents preference in borrowing the below listed personal loans. Graph showing respondents choice in borrowing the following micro & small enterprises loans. Graph showing which loan does the respondents like to obtain from the below listed commercial & institutional loans. Graph showing the level of satisfaction towards loans and advances.
Page No.
12
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13
FINANCIAL STATEMENT
BALANCE SHEET OF STATE BANK OF MYSORE
AS ON 31-03-2008 Capital & Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities AS ON 31-03-2009 (Rs. in Crore) AS ON 31-03-2010
36.00 36.00 0.00 0.00 1,341.81 0.00 1,377.81 27,4 62.40 1,7 31.53 29,193.93 2,4 97.96 33,0 69.70 AS ON 31-3-2008
36.00 36.00 0.00 0.00 1,635.11 599.93 2,271.04 32,9 15.77 2,7 62.08 35,677.85 2,536.90 40,485.78 AS ON 31-3-2009 1,735.05 25,616.05 11,377.96 1,060.28 328.91 731.37 0.00 617.70 40,485.79 17,073.90 2,935.90 464.20
36.00 2,037.40 591.89 2,665.29 38,880.00 2,274.01 41,154.01 1,589.64 45,408.94 AS ON 31-3-2010 2,765.62 29,535.86 11,494.41 1,107.10 374.11 732.99 0.00 606.20 45,408.93 20,057.35 51.60 575.94
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Assets Cash & Balances with RBI Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs)
2,661.55 21,027.15 8,402.76 406.56 283.57 122.99 0.00 610.72 33,069.71 12,871.72 2,888.47 3,827.26
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